What is the Social Value of Second-Generation Biofuels?

23 Pages Posted: 20 Apr 2016

See all articles by Thomas W. Hertel

Thomas W. Hertel

Purdue University - Center for Global Trade Analysis; Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP)

Jevgenijs Steinbuks

World Bank - Development Research Group (DECRG)

Wallace E. Tyner

Purdue University - Department of Agricultural Economics

Date Written: December 1, 2014

Abstract

What is second-generation biofuel technology worth to global society? A dynamic, computable partial equilibrium model (called FABLE) is used to assess changes in global land use for crops, livestock, biofuels, forestry, and environmental services, as well as greenhouse gas emissions, with and without second-generation biofuels technology. The difference in the discounted stream of global valuations of land-based goods and services gives the value of second-generation technology to society. Under baseline conditions, this to amounts to $64.2 billion at today's population or an increase of roughly 0.3 percent in the valuation of the world's land resources. This gain arises despite the fact that, in the baseline scenario, the technology does not become commercially viable until 2035. Alternative scenarios considered include: diminished crop yield growth owing to adverse climate impacts, flat energy prices, low economic growth, and high population growth, as well as greenhouse gas regulation. The most important factor driving second-generation valuation is greenhouse gas regulation, which more than doubles the social value of this technology. Flat energy prices essentially eliminate the value of second-generation technology to society, and high population growth reduces its value because of the heightened competition for land for food production.

Keywords: Climate Change Mitigation and Green House Gases, Renewable Energy, Energy Demand, Energy and Mining, Rural and Renewable Energy, Energy and Environment

Suggested Citation

Hertel, Thomas W. and Steinbuks, Jevgenijs and Tyner, Wallace E., What is the Social Value of Second-Generation Biofuels? (December 1, 2014). World Bank Policy Research Working Paper No. 7142, Available at SSRN: https://ssrn.com/abstract=2540772

Thomas W. Hertel (Contact Author)

Purdue University - Center for Global Trade Analysis ( email )

Department of Agricultural Economics
1145 Krannert Building
West Lafayette, IN 47907-1145
United States
765-494-4199 (Phone)
765-494-9176 (Fax)

Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP) ( email )

5735 S. Ellis Street
Chicago, IL 60637
United States

Jevgenijs Steinbuks

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Wallace E. Tyner

Purdue University - Department of Agricultural Economics

West Lafayette, IN 47907-1145
United States

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